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$16.4 billion up for grabs as customers intend to switch financial institutions

Source: Roy Morgan Single Source (June 2013), Australians aged 14+ who have a transaction or deposit account and plan to switch in the next 6 months. n=841.
The majority of Australians (97%) aged 14+ have a transaction or deposit account with a financial institution. Approximately 650,000 (3.5%) of these customers are intending to switch an account in the next 6 months. In dollar terms these accounts are worth approximately $16.4 billion. These figures are based on the latest findings from the Roy Morgan Consumer Finance Single Source Survey.

In the 6 months to June 2013, the majority of transaction or deposit account customers intend to stay with their current financial institution, however approximately 3.5% are planning to switch a transaction or deposit account to another institution in the next 6 months.

The total transaction or deposit account market is worth approximately $514.4 billion dollars. Customers who plan to switch their transaction accounts are worth slightly over $16.4 billion dollars. 

deposit customer switching

In terms of dollar share for customers who plan to move, Commonwealth Bank and ANZ make up close to 50% of the total market (CBA with 25.6% and ANZ at 23.5%), followed by National Australia Bank at 10.6% and Westpac at 9.7%. Credit Union or Building Societies account for 5.1% of the switching market share and the remaining 25.5% at other institutions.

The ANZ’s potential loss of $3.9b over the next 6 months represents 5.5% of their customer balances in these accounts; this is well ahead of the CBA that could loose 3.5% of balances, followed by NAB (3.1%) and Westpac (2.7%).

It is interesting to note that approximately 1 in 4 (26%) of all switching customers are yet to make up their mind in terms of the institution they intend to switch to. There is an opportunity for financial institutions to understand these consumers and position their products and services accordingly to gain market share.

Among customers who are intending to switch their transaction accounts, the next few months are crucial in their decision making. If institutions are not successful in meeting their banking needs and demand, customers might actually take the plunge.

Norman Morris, Industry Communications Director, Roy Morgan Research says:

“Perhaps in the past the banking industry has been guilty of chasing new customers rather than ensuring that their existing customers are retained and grown. Special deals or introduction rates are often used to attract new business but it may be at the expense of existing customers who are likely to feel less valued.
“We have seen in this example that $16.4 billion dollars are likely to be switched in deposit and transaction accounts over the next six months, if we included cards, loans, etc the figure would be much greater.
“It will be interesting to note what actions the financial institutions take in order to attract new customers and at the same time retain the existing ones.”

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For comments or more information please contact:
Norman Morris, Industry Communications Director
Telephone: +61 (3) 9224 5172
Mobile: +61 402 014 474
Email: Norman.morris@roymorgan.com

About Roy Morgan Research

Roy Morgan Research is the largest independent Australian research company, with offices in each state of Australia, as well as in New Zealand, the United States and the United Kingdom. A full service research organisation specialising in omnibus and syndicated data, Roy Morgan Research has over 70 years’ experience in collecting objective, independent information on consumers.

In Australia, Roy Morgan Research is considered to be the authoritative source of information on financial behaviour, readership, voting intentions and consumer confidence. Roy Morgan Research is a specialist in recontact customised surveys which provide invaluable and effective qualitative and quantitative information regarding customers and target markets.

About Roy Morgan Consumer Single Source

Roy Morgan Single Source is based on over 50,000 interviews each year and has been designed and engineered to represent the ideal source model. It provides an integrated understanding of consumers; what they are like, what they consume, what they buy, what they think, what they want, what they watch, read and listen to. The overriding benefit of Roy Morgan Single Source is the strategic insights it offers in the ability to link many aspects. Not only can an organisation’s profitable customers be delineated by what they think, do, watch, but so can non customers. Hence brand positioning, product differentiation, merchandising, efficient media planning, market expansion and line extension opportunities can all be considered in the light of the correct understanding of the marketplace.

Margin of Error

The margin of error to be allowed for in any estimate depends mainly on the number of interviews on which it is based. Margin of error gives indications of the likely range within which estimates would be 95% likely to fall, expressed as the number of percentage points above or below the actual estimate. Allowance for design effects (such as stratification and weighting) should be made as appropriate.

Sample Size

Percentage Estimate

40%-60%

25% or 75%

10% or 90%

5% or 95%

5,000

±1.4

±1.2

±0.8

±0.6

7,500

±1.1

±1.0

±0.7

±0.5

10,000

±1.0

±0.9

±0.6

±0.4

20,000

±0.7

±0.6

±0.4

±0.3